Java UDP Applet Problem

Hey,

I'm not very good at programming in java so this problem may be very simple. I'm trying to get basic communications between a UDP server application and a UDP Client running in an applet. The client works fine when I run the code inside an application, but when I run it as an applet I get the JOptionPane showing "Probe1" but never gets to "Probe2". Has this got something to do with java security not allowing UDP/TCP from an applet? I had a similar project work using TCP last year as long as I was communicating with an application on the localhost so I thought it should work the same here. Any help would be very much appriecated.

Edit: I just checked to see if there was any error raised in the applet. When I print it out it shows:
java.security.AccessControlException: access denied (java.net.SocketPermission 127.0.0.1:9876 connect, resolve)
What does this mean??
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import java.applet.*;
import java.awt.*;
import java.io.*;
import java.net.*;
import javax.swing.*;

public class UDPApplet extends Applet
{
//public void paint( Graphics g )
public void init()
{
try
{
DatagramSocket clientSocket = new DatagramSocket();

InetAddress IPAddress = InetAddress.getByName("127.0.0.1");

byte[] sendData = new byte[1024];

byte[] receiveData = new byte[1024];

String sentence = "Hello World";

sendData = sentence.getBytes();

DatagramPacket sendPacket = new DatagramPacket(sendData, sendData.length, IPAddress, 9876);

JOptionPane.showMessageDialog(null, "Probe1");

clientSocket.send(sendPacket);

JOptionPane.showMessageDialog(null, "Probe2");

DatagramPacket receivePacket = new DatagramPacket(receiveData, receiveData.length);

clientSocket.receive(receivePacket);

String modifiedSentence = new String(receivePacket.getData());

JOptionPane.showMessageDialog(null, modifiedSentence);

clientSocket.close();

}
catch (Exception e) {}
}
}
______________________________________________

import java.io.*;
import java.net.*;

class UDPS
{
public static void main(String args[]) throws Exception
{

DatagramSocket serverSocket = new DatagramSocket(9876);

byte[] receiveData = new byte[1024];

byte[] sendData = new byte[1024];

while(true)
{

DatagramPacket receivePacket = new DatagramPacket(receiveData, receiveData.length);

serverSocket.receive(receivePacket);

String sentence = new String(receivePacket.getData());

InetAddress IPAddress = receivePacket.getAddress();

int port = receivePacket.getPort();

String capitalizedSentence = sentence.toUpperCase();

sendData = capitalizedSentence.getBytes();

DatagramPacket sendPacket = new DatagramPacket(sendData, sendData.length, IPAddress, port);

serverSocket.send(sendPacket);
}
}

}